The Scottish Governments's draft Energy Strategy paper has just been published. This comes at a time when exciting developments are taking place in the renewable energy market around economic challenges and mixed priorities in the wider UK policy environment.
The 2017 Energy Strategy will follow in the wake of a first for the Scottish renewables industry. On 7th August 2016 the country was, for a day, the equivalent of electricity self-sufficient, when Scottish wind turbines met 100% of daily electricity. The Scottish Government has already set a target of meeting 100% of electricity demand from renewables by 2020. The ambition of energy self- sufficiency, with the economic benefits this brings, irrespective of the country’s political future, is powerful. The Strategy will provide the route map to that objective as well as contribute to the UK’s Paris Treaty objectives.
However, against a policy backdrop of reduced financial support for the renewable industry from the UK government, the Strategy will need to be creative and financially robust.
The ambition of energy self-sufficiency has undoubtedly engendered public interest, as has the potential role of renewables to reduce fuel poverty. Recent survey evidence (ComRes, Oct 2016) indicates 80% public support for renewables in Scotland, a necessary component to facilitate the development and renewal of technology and sites.
The importance of public support is recognised by the Scottish Government who has committed to at least 50% of all new Scottish windfarms providing community shared ownership as part of their planning applications by 2020. However, it remains the case that irrespective of public or even political support, it is the economics that dictate the ability to deliver a renewable energy strategy on the ground. It is significant therefore that research undertaken for Scottish Renewables by Everoze found the potential to reduce the cost of onshore wind power by 20%.
The Scottish renewable industry faces relatively higher installation costs due to geography, which is an issue for investors who face an uncertain financial regime. This is particularly the case in the wake of Brexit with the loss of EU funding for capital intensive projects which are so essential at this stage of the sector’s evolutionary story. The plan for Scotland’s energy future therefore needs to present meaningful solutions.
We consider five areas we would like to see the 2017 Energy Strategy address.
1. Be bold and assert the role of the new generation of wind turbines
Technological advances in onshore wind generation have moved on significantly since Scotland’s first windfarm schemes. The new generation of turbine has longer blades, but for this reason needs to be taller to maximise the efficiency of the engineering. It is essential that we deliver these efficiencies.
The viability of onshore wind generation has been negatively affected by the downward pressure on electricity prices compounded, in some instances, by the removal of financial support in the form of Contracts for Difference (CfD). CfDs guarantee a minimum price, in this case for renewable energy generated.
The new technology means fewer turbines at greater spacing. But, despite this, there
needs to be recognition that the taller, more efficient wind turbines will have a visual impact. The evidence of public support for renewables in the country is encouraging, although the path of projects at a local individual level will inevitably be more nuanced.
We therefore ask that the new Energy Strategy is bold and upfront about the impact of the new turbines with delivery imbedded in planning policy; the price to pay for a sustainable and cost efficient power source.
2. Re-powering programme for future onshore wind capacity
Over the next decade we face the challenge of obsolesce in our existing wind turbine provision. As existing infrastructure comes to the end of its effective life during its current consent period, a strategy to replace and upgrade turbines will be required in order to sustain and expand our renewable energy capacity.
This will be most effectively achieved on the sites of existing wind farms where grid and road infrastructure is in place. While life extension of existing turbines will occur in some instances, a strategic upgrade of sites would deliver a transition to the longer tipped and more efficient technology forementioned.
This will, however, mean that sites will include a mix of turbine heights during the period of the rolling upgrade programme.
We want to see the forthcoming Strategy acknowledge the visual impact of the staged re-powering of onshore windfarms and provide support where applications are met with resistance. Imbedded community benefits will help ensure interests are aligned.
3. Provide a strategy for hybrid technology sites as part of a holistic energy policy
As both wind and solar technologies evolve so should our strategy to maximise efficiencies in the management of these energy sources.
There are significant economies in the co-location of wind and solar technology. Efficiencies are achieved in combining sites to utilise grid access as well as road and other infrastructure services. This may be taken a step further by also combining battery storage sites. This will require support from the National Grid to invest in a fit for purpose grid structure, combined with early engagement with landowners and the local community.
This needs to be considered within the context of a holistic energy policy, which includes effective energy management and alignment with other areas of Scottish government policy. This will for example include transport, whether public transport or electric vehicle policy targets.
We hope the Energy Strategy will take a holistic approach to the country’s renewable energy, including the identification of hybrid wind and solar technology sites with battery storage capacity, as well as making explicit links to other areas of Government policy.
Gross electricity consumption in Scotland in 2015 provided by renewables
Increase in renewable energy deployed in Scotland over the last decade
4. Commitment to financial guarantees for pumped storage hydro electricity generation
The storage of excess power from renewable sources is essential to the financial viability of the renewable energy equation. Pumped storage allows surplus energy to be used to pump water back up to the dam for release during periods of high demand, mitigating the need for fossil fuels to fill the gap. However, the facilities require significant capital investment. This investment is mired by risk assessments in financial models.
The need for investment and risk underwriting is illustrated by the Coire Glas pumped storage project in the Highlands. The consented scheme would have the potential to provide up to 450MW of continuous power for three days. However, the construction of the facility depends on greater financial security for the term of the project.
We ask that the Energy Strategy commit to long term financial security measures for pumped storage hydro projects to facilitate construction. This will fill the missing link in delivering a holistic renewable energy strategy for Scotland. The approval of a pumped storage hydro electricity generation station at Dumfries and Galloway is positive news, although the land-owner in this case is taking a long term view. While there are many other sites with potential, relatively few are economically viable at present.
5. Commitment to underwrite the construction of Scottish Islands sub -sea interconnectors
The Scottish Islands present a significant potential for renewable energy provision, in both on and offshore technology. However, the start up costs for these locations are significant, particularly when compared with more accessible mainland sites offering superior accessibility and build conditions, as well as lower grid connection charges.
A long term view is needed to underwrite the potential of island locations, particularly given the associated economic development and employment opportunities so badly needed. Despite this it is unclear whether onshore wind projects on remote islands will be eligible for the next round of CfD funding. The next auction, announced by the Department of Business, Energy and Industrial Strategy, will see companies compete for £290 million of contracts for renewable electricity projects, with bidding taking place in April 2017. However, a consultation to determine whether island sites should be treated differently from mainland projects will close in January 2017.
We ask that the Energy Strategy sets out measures to underwrite investment in sub-sea interconnectors and if necessary provide gap funding to support island onshore wind projects The removal of risk would aid investment and enable islanders to benefit from the income generation while providing submarket rates to locals.
Tip height of new generation
Of renewable electricity capacity added in 2015
Sources: Scottish Energy News; European Investment Bank; University of Strathclyde; ComRes Global, Everoze.